loan with company pty ltd income

I am a sole trader business. If I change into company pty ltd business entity and use a part of company income to pay to myself as sole director, will there be difficult to obtain loans in the future?

Will company income be assessed in serviceability?

 

This won't be a problem with most lenders. When you apply for a home loan, the lender will take into account the business net profit + addbacks, as well as the salary you pay yourself.

 

What lenders will want to see is continuity of income. Given you're simply changing the business structure, it's probably not a big deal. If necessary a simple letter from your accountant would go a long way to addressing this.

 

When do you expect to be applying for finance?

 

As long as income steam and line of busienss hasn't change then you'll be right.

Can either applied through full financials or payslips If you pay yourself regularly once incorporated into PTY LTD

 

@Tony Xia, Peter, Nick Thanks for your reply

@Lindsay - Just medium-term future (1-3 years) but not sure when

 

Full financials for income verification - Lenders will see your full company situation

Simple verification (i.e. payslips if you pay yourself regular salary) - Lenders will just ask for your regular payslips and accountant's letter confirming business is profitable and meeting all company commitments/liabilties. This may be a better strategy for borrowing capacity if you have company liabilities, as lenders will exclude this if you go with simple verification.

I would suggest go with the method which will give you stronger borrowing power/capacity.

 

Shouldn't be a problem, as Pete mentioned, a letter from the accountant confirming the change of structure should be sufficient.

 

Lenders will also consider if the new company income is the same source and nature as former sole trader income they should have no issues. They may seek accountants letter to confirm etc. May seek BAS' etc. Typical of issues most brokers encounter and can steer.

 

Hasnt been an issue for me. Lenders are smart enough to know that income is income. I get a normal payg salary just like my staff do, and banks look at that, as well as the profit the company makes minus debts, living expenses, etc

 

Don't forget your addbacks too